Volume 120

CZYŻEWSKI Bazyli and MATUSZCZAK Anna (2018-08): Rent-seeking in agricultural policy revisited: a new look at the Common Agricultural Policy consensus

It is generally believed that agricultural interventionism represents the payment of political rents to farmers. We attempt to show that the concept of political rent known as the rent-seeking theory is not valid for agricultural policy. It is not justified to identify the entire subsidies paid to agriculture as a ‘political rent’, since political rents cannot be taken to include payments for the supply of public goods or those transfers which compensate for market imperfections. Our work aims firstly to review the concepts of rents and rent-seeking, and to develop a methodology for quantifying political rents in agricultural policy. We perform comparative analyses with the aim of calculating the ‘pure political rent’, based on the input-output approach for representative farms according to the EU FADN typology and on a decomposition of the Hicks–Moorsteen TFP index for the period 2004-2012 and 27 European Union Member States. The calculations of political rents show that historical payments are neither a rational nor a just solution. No attempts have yet been made in the literature to quantify political rents, even though this might lead to an improvement in the effectiveness of public expenditure. The original methodology is proposed for valuing these items.

QUENDLER Erika (2018-06): CommunalAudit, a guide for municipalities in Austria to foster inclusive and sustainable development

Municipalities in Austria have been exploring ways to adopt inclusive and sustainable development approaches based on the built environment. It is a fact that the tasks of municipalities are becoming more and more comprehensive, while the resources available are not increasing to the same extent. However, the sustainable provision of municipal public services must remain a key component in strengthening rural areas. One way is to conduct a CommunalAudit. In addition to the identification of optimisation and development options, the CommunalAudit tool serves as a basis for inter-communal cooperation. Moreover, it enables municipalities to look at their finances and entire infrastructure in an objective and systematic way and to compare them with those of others. Between 2008 and 2013, the CommunalAudit was one of the measures within the Rural Development Programme in Austria. This contribution (a) explores the implementation of CommunalAudit in Austria, (b) highlights the benefits and drawbacks for municipalities and citizenry, and (c) looks at the former’s further development.

NIGMANN Thilo, Dax Thomas and HOVORKA Gerhard (2018-06): Applying a social-ecological approach to enhancing provision of public goods through agriculture and forestry activities across the European Union

Public goods provided by different land management practices in European regions have increasingly attained attention in agricultural policy debates. By focusing on the social-ecological systems (SES) framework, the systemic interrelations (e.g. drivers, resources, actors, governance regimes and policy impact) in land management across several case studies in various topographical and climatic conditions across ten European Union Member States are provided. The analysis of agricultural and forestry systems reveals a wide range of factors that drive the provision of ‘ecologically and socially beneficial outcomes’ (ESBOs). The respective influencing aspects cannot be reduced to market forces and policy support, but have to address simultaneously the pivotal role of social, cultural and institutional drivers as well. In particular, the tight interplay between public policies and private initiatives, and market mechanisms and societal appreciation of public goods delivery have shown to be the indispensable clue for understanding the relationship shaping the level of provision of public goods. Comparative analyses support the strong reliance on context, history, types of regions and differentiation of management systems which might be used for recommendations in the current debate on the future Common Agricultural Policy.

BAER-NAWROCKA Agnieszka and BŁOCISZ Justyna (2018-06): Efficiency of Polish organic and conventional farms

The main objective of this study is to compare the efficiencies of organic and conventional farms in Poland. As shown by the conducted analysis, acting in compliance with the essential production principles, organic farms practiced extensive farming which resulted in reduced efficiency of productive inputs. The efficiency of land and labour measured by the Adjusted Net Value Added was respectively nearly 30 and 65 per cent higher in conventional holdings. Moreover, subsidies contribute more to the income of organic farms, making them strongly dependent on external support (this is especially true for farms with grazing livestock). As a part of policy planning, it should be taken into consideration that organic farms may in the future encounter a development barrier stemming from lower efficiency, difficult access to subsidies and, finally, lower levels of income.

Takácsné György Katalin, Lámfalusi Ibolya, Molnár András, Sulyok Dénes, Gaál Márta, Keményné Horváth Zsuzsanna, Domán Csaba, Illés Ivett, Kiss Andrea, Péter Krisztina and Kemény Gábor (2018): Precision agriculture in Hungary: assessment of perceptions and accounting records of FADN arable farms

Technological progress can provide several solutions to the most significant challenges faced by agriculture. Precision agriculture (PA) technologies have been recognised as one of the rare win-win solutions for environmental and socio-economic goals. Although they have been available for decades, their diffusion progresses at a slow rate. Therefore, in recent years, precision farming has been receiving more attention from agricultural economists. Perceptions of Hungarian FADN arable farms about precision farming were collected through a survey in order to compare with cost-benefit analyses. The survey not only revealed the details of the application of different technologies but also their impacts perceived compared to a baseline situation. For the main crops, the results confirmed that precision farming leads to increasing yields and has profitability benefits compared to conventional farming. According to the respondents, the high investment cost is the main barrier to diffusion, while subsidies and more appropriate information could foster it. Therefore, a specific subsidy package implemented both in the ‘greening’ component and in the Rural Development Programme of the European Union’s Common Agricultural Policy would be a stimulating factor for the wider spread of PA.

CHMIELIŃSKI Paweł, FACCILONGO Nicola, FIORE Mariantonietta and LA SALA Piermichele (2018-06): Design and implementation of the Local Development Strategy: a case study of Polish and Italian Local Action Groups in 2007-2013

We investigated the extent to which the Local Development Strategy (LDS) activities planned at the beginning of the European Union’s Leader programme implementation period, and the associated budget allocation in response to the defined local needs, were confirmed at the end of the period. We used as examples the implementation of two LDSs, one by a Local Action Group (LAG) in Poland and one in Italy. We applied some simple indicators to assess how much the budget assumptions at the planning level were reflected in the successful implementation of projects, and conducted interviews with representatives of the two LAGs. We showed that the two LAGs were generally working effectively but that excessive institutionalisation could be the major constraint to the proper design of the LDS and thus the implementation of the Leader programme. For the Polish LAG, it was because of the transfer of the evaluating role outside of the LAG: assessment of applications was undertaken by the regional institution, the Agency for Restructuring and Modernisation of Agriculture. In the case of the Italian LAG, the reason was an excessive formalisation of the rules concerning project applications.

RUDNICKI Roman, JEZIERSKA-THÖLE Aleksandra, WIŚNIEWSKI Łukasz, JANZEN Jörg and KOZŁOWSKI Leszek (2018-06): Former political borders and their impact on the evolution of the present-day spatial structure of agriculture in Poland

The paper deals with the results of an analysis of the spatial structure of agriculture in Poland which was aimed at assessing the impact of the historical factor. The territory of present-day Poland includes the political borders of the 19th and 20th centuries which divided the area into two parts: western (Kingdom of Prussia and the land belonging to Poland and Germany in the interwar period) and eastern (the land of the Russian Empire and the Austro-Hungarian Empire which later belonged to Poland in the interwar period). The historical factor and its impact were examined also in the comparative analysis of two adjoining stretches of land accepted as territorial units (East Poland and West Poland). We showed that historical borders constitute an important element affecting the evolution of the spatial structure of Polish agriculture. The impact of the historical factor was shown to be the strongest for the differences in the features associated with agrarian structure, rural socio-demography, and productivity and profitability of agricultural holdings.

MEYER Kevin (2018-08): The Impact of Agricultural Land Use Change on Lake Water Quality: Evidence from Iowa

The environmental impacts of agricultural policies must be quantified to perform full cost-benefit analyses and make informed policy decisions. In this paper I use a unique panel data set to estimate the effect of changes in cropland on lake water quality. Fifteen years of water quality measurements across over 100 lakes are combined with satellite imagery and weather data. Using a dynamic panel data model, I find that the elasticity of water quality to cropland is 0.0535. To understand the policy implications, I estimate a second model to find the elasticity of cropland to crop prices. I combine these estimates to analyze the effect of the Renewable Fuel Standard (RFS). I find that the RFS decreased lake water quality; however, the magnitude of this effect is negligible.

SWINBANK Alan (2018-08): Tariffs, trade, and incomplete CAP reform

The original CAP’s high levels of border protection on many products involved a variable import levy bridging the gap between world prices and the EU’s much higher minimum import price. The Uruguay Round ended this, but tariffication also meant that subsequent CAP reforms reducing EU levels of domestic market price support would no longer trigger lower tariffs. Moreover the Doha Round’s plans for tariff cuts are in abeyance. The consequences are: i) for these products, only preferential sup¬pliers penetrate the EU’s protected market; ii) negotiation of Free Trade Areas is made more complicated; and iii) “Brexit” is problematic.

SOÓS Gabriella and BIACS Péter Ákos (2018-06): The role of product-related information and factors impacting consumer attitudes during health-conscious food purchase in Hungary

502). To reduce the high number and hard-to-interpret attitude variables, a factor analysis was performed, followed by the formation of consumer segments via cluster analysis according to the consumer attitude indicators. These segments were termed Health-conscious consumers, Consumers with limited information, The sceptics and The price conscious, and were characterised according to socio-demographic, behavioural and attitude variables. Then, we sought to identify the sources of information that would best address a given segment, and explored the efficiency of information transfer in the functional food market.

VÍGH Enikő, FERTŐ Imre and FOGARASI József (2018-06): Impacts of climate on technical efficiency in the Hungarian arable sector

The aim of this study is to estimate the influence of climate factors on the technical efficiency of Hungarian arable farms. The technical efficiency of farms is affected by several factors such as the technology used, the relative factor abundance, the institutional reforms with the input and output market environment, the farm size and scale economies, the organisation and management, and the farm’s specialisation. We employed a two-step approach to identify the impact of climate change on the efficiency of these farms. In the first step, using the Data Envelopment Analysis model, we calculated the efficiency (dependent variable in the second stage of analysis) of these processes. In the second step, we investigated the effect of climate and soil factors (independent variables) on efficiency by applying the Simar and Wilson (2007) approach. In this way we can assess the impacts of matched environmental variables through a robust, representative dataset for Hungary. Our results show that temperature and precipitation increases had statistically significant, positive effects on the technical efficiency of farms in the seeding and vegetative periods in both the constant and variable returns to scale models, and temperature increase during the generative phase of crop production had a negative effect on production efficiency.

SZERLETICS Ákos (2018-08): Degressivity, capping and European farm structure: New evidence from Hungary

The debate on reforming the Common Agricultural Policy (CAP) after 2020 had already started when the European Commission published its own vision on the future of agriculture and food production in the European Union. One of the key aspects of this debate relates to the revision of the system of EU direct payments by revising degressivity and capping rules. Although it has, for a long time, been a popular idea to limit payments to larger farms in one way or another, and subsidise smaller agricultural holdings instead, this idea has serious drawbacks as this paper shows. The aim of this study is to analyse the impact of degressivity and capping on European farm structures by reviewing existing literature on the topic as well as by providing new evidence from Hungary. Results suggest that placing a cap on direct payments may be causing more harm than good in terms of land use change.

WRZASZCZ Wioletta (2018-08): Effectiveness of Greening in Poland

Under the latest reform of the Common Agricultural Policy, 2015 was the first year when greening requirements were implemented. Legal rules obliged farmers to move towards more environmentally-friendly land use practices. The aim of this paper is to present the first effects of the implementation of greening in Poland. The paper is based on an FADN panel of 7.4 thousand private farms participated in the Single Area Payment Scheme in Poland. The sample also enabled to identify organisational changes in agricultural production after greening. Results suggest that Polish farms have adapted well to greening requirements and the new system has not caused productivity and profitability of Polish farms to decrease in 2015.

LIU Xinran and GE Wei (2018-08): Who Benefits from the Export Tax Rebate Policy? Evidence from the Chinese Fishery Sector

The export tax rebate policy in China is under dispute, especially in agricultural sectors, as it is claimed that it works as a subsidy for foreign consumers rather than domestic producers. Surprisingly, little research has investigated the distribution of benefits of this policy. In this paper, we examine this in a partial equilibrium framework. We find that the effects of the export tax rebate on domestic producers depend on the relative magnitude of the export supply and import demand elasticities. The model is then applied to the Chinese fishery sector, a perfect example to illustrate the policy debate. Simulation results indicate that, although the export tax rebate increases Chinese producers’ welfare, foreign consumers capture most of its welfare benefits (60%-75%). Furthermore, the results imply that the welfare gain for Chinese producers is overestimated if vertical linkage between the retail and the farm markets is ignored.

DUCHOSLAV Jan and ASSELDONK Marcel van (2018-08): Adoption and impact of credit-linked crop index insurance: a case study in Mali

Linking insurance with credit is a promising approach towards overcoming the main difficulties of scaling up crop insurance in Africa. The current research revealed that credit-linked crop insurance adopters in Mali were on average larger households than non-adopters, were living more often from subsistence agriculture, were less patient and less likely to produce maize, while operating on smaller farms. However, propensity score matching revealed that changes in terms of production decisions or wellbeing were limited compared to credit-users. To achieve scaling, linking crop insurance with credit should not only be beneficial for banks to limit their exposure (on a mandatory basis), but should become beneficial as well for smallholders (in terms of better access to credit, lower interest rates or less required collateral).

KIM Man-Keun and TEJEDA Hernan A. (2018-11-16): Implicit Cost of the 2010 Foot-and-Mouth Disease in Korea

The most destructive foot-and-mouse disease (FMD) outbreak in Korea occurred in November 2010. Various studies have quantified the economic impact of culling affected animals, mostly swine, from the event by applying different assumptions to the Input-Output (IO) model. The present study takes into account a type of implicit cost, considering the types of effects in the previous literature, as well as costs that have been unaccounted for in prior studies. A seasonal autoregressive model (SARIMA) is estimated employing the number of swine slaughtered leading up to the 2010 FMD outbreak, and forecasts from the model are compared to the actual drop and rebound. The unaccounted implicit cost is estimated to be more than 2 trillion Korean Won (≈ 1.8 billion US dollars), which is a cost Korea must give up or cannot recover. This study serves to strengthen the justification of applying preventive efforts to reduce the likelihood and economic impact of an animal disease outbreak and may be applied in other countries.

WONGPRAWMAS Rungsaran, CANAVARI Maurizio, IMAMI Drini, GJONBALAJ Mujë and GJOKAJ Ekrem (2018-11-16): Attitudes and preferences of Kosovar consumers towards quality and origin of meat

Quality and safety are important attributes for consumers in developed and transitional countries such as Kosovo. This study aims to examine Kosovar consumers’ characteristics, attitude and preferences towards meat as well as to provide meat consumer profiling using a descriptive analysis together with the Food-Related Lifestyle approach. We drew a sample of 300 Kosovar consumers by means of intercept sampling in Prishtina, Prizren and Gjilan. Results suggest that Kosovar consumers perceive country of origin (COO), especially domestic origin, as an indicator of quality and safety for meat. Two consumer profiles were identified through segmentation analysis: conservative and innovative food consumers. The innovative food consumer is the most interesting target segment for Kosovar meat. There is potentially a market for meat products bearing food safety and origin labels. Therefore, private operators could consider the use of safety certification labels to signal to consumers that their products are safer than common products. The paper concludes by discussing the implications of our findings for businesses and policy makers regarding domestic meat promotion strategies.

URRIOLA CANCHARI Nadia Nora, AQUINO RODRIGUEZ Carlos Alberto and BARAL Pradeep (2018-11-16): The impact of traditional and non-traditional agricultural exports on the economic growth of Peru: a short- and long-run analysis

This study aims to analyze and quantify the short- and long-run impact of agricultural exports–both traditional and non-traditional products–on economic growth of Peru using an annual time series data from 2000 to 2016 obtained from the Central Bank of Peru and the World Bank. Traditional agricultural exports value, non-traditional agricultural exports value, labor force and fixed capital formation value for each year of the stipulated period were used as determinant factors of the economic growth. A Vector Autoregression (VAR) Model, Augmented Dickey-Fuller (ADF) test, Johansen Co-integration test and Granger Causality test were employed for data analysis. The findings revealed that in the short run, traditional agricultural exports have had a positive but non-significant effect on economic growth while non-traditional agricultural exports have had a positive and significant effect on Gross Domestic Product (GDP). Meanwhile, both fixed capital formation and the labor force have had a significant effect on the GDP, albeit in different directions. The ADF test showed that, with the exception of traditional agricultural exports and fixed capital formation, all determinants became stationary at a level I (0). Moreover, the Co-integration result showed that there is a long-run relationship between the studied variables and a unidirectional causality in the relation between the determinant variables and economic growth.

DJOKOTO Justice Gameli and POMEYIE Paragon (2018-11-19): Productivity of organic and conventional agriculture – a common technology analysis

The raging debate on organic versus conventional agriculture, and with regard to the aspect of productivity in particular, is far from conclusive. In this analysis, we explore the productivity comparison further through the evaluation of a common production technology used in 74 countries around the world, over the period 2005 to 2014. We found conventional agriculture to be more productive than organic agriculture. Whilst productivity of conventional agriculture is exponentially rising, that of organic is declining, although it has a quadratic growth path. For every hectare of conventional agricultural land given up, only 0.54 hectares of organic land area is substituted. Based on an elasticity of substitution of 0.36, the isoquant is relatively vertical; therefore, much more conventional lands need to be substituted with an organic land area. Research into new and improved fertilising and pest control methods is essential as positive developments there would have a significant impact on organic land productivity.

CIAIAN Pavel, RAJCANIOVA Miroslava, GURI Fatmir, ZHLLIMA Edvin and SHAHU Edmira (2018-11-19): The impact of crop rotation and land fragmentation on farm productivity in Albania

In this study, we estimate the impact of land fragmentation and crop rotation on farm productivity in rural Albania. We employ a stochastic production frontier estimation approach to survey data collected among farm households in Albania in 2013. Our estimates suggest that land fragmentation improves farm efficiency, probably because it permits a better use of household labour during the production seasons. Our estimates also suggest that crop rotation increases farm efficiency. However, the impact of land fragmentation on on farm efficiency is far more pronounced.

LEITÃO Nuno Carlos (2018-11): The relationship between carbon dioxide emissions and Portuguese agricultural productivity

This study analyses the relationship among carbon dioxide emissions, energy consumption, agricultural labour productivity, agricultural land productivity and agricultural raw material exports using a time series for the period 1960-2015. In this article, some theroretical hypotheses are formulated, aiming to explain the bidirectional causality between agricultural productivity and climate change. These hypotheses are tested by using Vector Autoregression (VAR), Granger causality and Vector Error Correction Models (VECM). Results confirm revelant theoretical hypotheses between agricultural productivity and climate change and show that the variables used are stationary. Agricultural labour and land productivity as well as agricultural raw material exports are positively related to CO2 emissions, meaning that these variables stimulate environmental pollution. Empirical results presented in the paper might be of interest to the academic community and also to policymakers.

TÖRÖK Áron and MOIR Hazel V. J. (2018-11): the market size for GI food products – evidence from the empirical economic literature

In order to understand the global importance of foods with Geographical Indications (GIs), it is essential to get an overview of the market size for such products. In spite of the relative importance of GI policy in EU trade agreements, there are only very limited data available on the actual market size for GI labelled products. Against this background this paper collects all the available data that provides estimates of the market size for GI foods, analysing the available datasets and reports of the European Commission and conducting a systematic literature review on the academic papers related to this topic. Based on the results we can underline the high level of concentration of GI products in terms of origin and product category. The most important GI market is the domestic market of the European Union even though the share of GI production is only a minor part of total agri-food output. On the other hand, GI products with both significant market size (domestic and export) and remarka¬ble market share also exist, but these are a small set of all registered GI products and are concentrated in only a few countries.